Answer: The answer is as follows:
Explanation:
Given that,
Acquired patent rights = $2,800,000
The patent has a useful life equal to its legal life of eight years.
Patent in a lawsuit at a cost = $38,000
(a) Patent amortization expense for Year 4 = [tex]\frac{2,800,000}{8}+\frac{38,000}{5}[/tex]
= $357,600
(b) The Adjusted journal entry is as follows:
Amortization expense A/C Dr. 357,600
To Accumulated amortization-Patent 357,600
Answer:
amortization expense for the 4th year: 357,600
journal entry:
amortization expense 357,600 debit
patents 357,600 credit
Explanation:
We have to determinate the amortization based on the useful life rather than legal life. Because, we can only use the patent to generate a positive cashflow during his useful life.
2,800,000 / 10 = 350,000 per year
balance after 3rd year:
2,800,000 - 350,000 x 3 = 1,750,000
The successfullly defense of a patent is capitalize into the patent account and amortizate over the remaining life of the patent.
Therefore, we add the defend: 1,750,000 + 38,000 = 1,788,000
The raiming life will be of 5 years
1,788,000 / 5 = 357,600 per year
